---

AerCap’s $1 billion award in insurance case

London’s High Court has ruled that aircraft-leasing company AerCap Ireland is entitled to recover around US $1 billion from insurers linked to aircraft leased to Russian airlines.

The five-month trial involved owners and lessors of aircraft and engines that were in Russia at the time of its invasion of Ukraine.

The planes were not recovered from Russia after its invasion, and the lessors claimed against their insurers.

Policies

The judgment handed down yesterday (11 June) related to 147 aircraft, 16 engines, and one other piece of equipment, with a total insured value of $4.7 billion.

The case centred on the nature of the claimants’ insurance policies, which were divided into categories of ‘all risks’ and ‘war risks’, as well as whether the aircraft had been lost to the lessors and what had caused the loss.

Mr Justice Butcher concluded that the aircraft had been lost, and that that loss occurred on 10 March 2022, when a piece of Russian legislation banned the export of aircraft and aircraft equipment from Russia.

“Given that conclusion as to the timing and cause of the loss, the judgment also finds that it is from their war-risks insurers, not their all-risks insurers, that each of the claimants can recover,” the judgment stated.

Sanctions

There was also an issue as to whether EU or US sanctions prevented the insurers from indemnifying the claimants for the loss of aircraft that had been leased to Russian airlines.

The judgment concluded that insurers were not prevented from indemnifying by sanctions.

In a statement, AerCap said that its 2022 results had recognised a pre-tax net charge of $2.7 billion, which included a total loss write-off of the assets that remained in Russia and Ukraine and impairment losses linked to assets it had recovered from Russia and Ukraine at that time.

“Following recoveries of $1.3 billion in 2023 and $195 million in 2024, this indemnity award will bring AerCap's total pre-tax recoveries relating to the Ukraine conflict to approximately $2.5 billion,” it said.